Introduction to this report:
The company is actively expanding product categories and increasing the layout of major clothing channels, and performance is expected to improve.
Key points of investment:
Conclusion: Considering that the company's downstream demand is still being repaired, the company's 2024-2025 EPS was lowered to 0.12/0.19 yuan (originally 0.32/0.37 yuan), and the 2026 EPS forecast was added to 0.29 yuan. Referring to comparable company valuations, the target price was lowered to 5.07 yuan (originally 6.63 yuan) to maintain the “increase in wealth” rating.
Demand for overseas furniture consumption weakened, depreciation increased, and expenses suppressed profits. In 2023, the company achieved revenue of 4,028 billion yuan/ -17.00%, net profit due to mother of -304 million yuan (0.37 million yuan in 2022), 2024Q1 achieved revenue of 887 million yuan/ -8.27%, and realized net profit to mother of -79 million yuan (-096 million yuan in 2023Q1). Impairment losses, increased interest expenses, and increased exchange losses put pressure on profitability in 2023.
Actively expand product categories, and mattresses and soft beds are growing steadily. In 2023, the company continued to consume high-priced raw materials, with a gross profit margin of 31.84% /-0.45pct. Among them, the gross margin of custom furniture/finished furniture was +1.48pct/-6.67pct, respectively, and the gross margin of Stressless/IMG/SVANE was +0.42pct/-2.33pct/+8.08pct, respectively. The company established Svane product channels globally and vigorously expanded the mattress and soft bed business.
Continue to innovate products and lay out home improvement channels. The company positions itself as a multi-functional space brand, builds brand online content assets through new media channels, and actively promotes store upgrades through direct management and distribution channels. In 2023, the company launched the Qumei Lab series dun sofa series and the new Hanguan 3.0 series products, and launched the “Qumei Yaoxingjia” series of products to explore new growth points in response to the characteristics of home improvement channel demand.
Risk warning: Customer growth falls short of expectations; raw material prices fluctuate greatly.